Lord Davies of Oldham: My Lords, I wish to give assurances to both noble Lords who have contributed to this short debate, but I also want to express a very powerful argument regarding why we cannot under any circumstances accept the amendment.

I begin with the assurances. The noble Lord, Lord Greenway, drew attention to the fact that I did not fully respond to these issues on a previous occasion. They are technical and I am not sure that I was fully equipped on that occasion to respond to the matter that he addressed. I am rather better equipped to do so today but nevertheless I am inevitably stuck with having to at least attempt to match the technical expertise that the noble Lord, Lord Higgins, has shown.

I believe that a misunderstanding of how navigational safety matters are taken into account under this legislation underpins the amendment. The DTI seeks the views of the Maritime and Coastguard Agency on all applications for a Transport and Works Act order that are made to the Secretary of State. The MCA has been consulted on all the offshore wind farm projects for which TWA orders have been granted so far. The MCA has not maintained an objection to any of those projects. Where the MCA gives its approval subject to certain conditions, such conditions would be taken into account in the TWA order and would be legally binding on the developer and enforceable in the same way as other provisions of the order. I can therefore give the categorical assurance that maritime safety is treated equally seriously whether the developer of an offshore wind farm seeks a TWA order or consent under the Electricity Act and Coast Protection Act. The same degree of concern about the maritime environment applies.

There is a further reason why the amendment would not be acceptable to us.

Lord Higgins: My Lords, my understanding is that the MCA involvement is not legally part of the consent regime under the TWA. The Minister seems to be contradicting that. One or other of us has been

20 Apr 2004 : Column 247

wrongly advised. Is he absolutely sure of what he saysthat the MCA has the legal right to exercise a veto?

Lord Davies of Oldham: My Lords, I have indicated that the MCA has played its part on all approvals, and that the conditions that it imposes would then be taken into account. They would be legally binding on the developer and enforceable in the same way as the provisions of the order. I am in some difficulty if the noble Lord contends that his understanding of the law is different from mine. I cite it as accurately as I can; I warned the House that we were entering the deep waters of technicality on the amendment.

Let me put the other point to the noble Lord. I am sure that he will take it as seriously as I do, although I might have rather more atavistic reasons for doing so. His amendment would disapply the TWA and, as he will probably recall from an earlier debate, leave the Welsh Assembly Government in a very difficult position. The Assembly Government do not have powers under Section 36 of the Electricity Act, but are responsible for TWA orders for offshore wind farms in Welsh territorial waters. If we disapplied the TWA, as the amendment suggests, the Welsh Assembly Government would have no role in the consent process for offshore wind farms.

I am sure that the noble Lord would not want that to be thrust on the good people of Wales, who have legitimate concerns about the issues as well. At present, the TWA is their only power of defence on the matter. For that reason, I hope that he will accept my assurance on the need to withdraw the amendment.

Lord Higgins: My Lords, can Wales not use the Coast Protection Act 1949?

Lord Davies of Oldham: My Lords, as I understand the position, that is not as effective as the TWA. The TWA is the most effective measure, and the one that Wales has used to safeguard its interests. We have been discussing the TWA in relation to the operation of the Maritime and Coastguard Agency in consultations on all matters that have taken place thus far on wind farm proposals.

I recognise the difficulty that the noble Lord and I have if we are not totally agreed on the law at present. Obviously, I can stand only on the basis of the expertise available to the Government, and the practice that we have followed in phase one of the consents applied. The amendment would certainly leave our Welsh colleagues in real difficulty with regard to control of the situation.

Lord Higgins: My Lords, as has been saidif the House will forgive the analogywe are in pretty deep waters. My understanding is that the Scottish position is protected. There is alternative legislation in the form of the Private Legislation Procedure (Scotland) Act 1936 and the Robin Rigg Offshore Wind Farm (Navigation and Fishing) (Scotland) Act 2003. I am deficient in advice on the situation in Wales. While I

20 Apr 2004 : Column 248

would not regard that as an overwhelming problem, as it could be put right, if necessary, on Report, we are left with a situation where we appear to have conflicting legal views on the issue. On these occasions I look hopefully in the direction of the Boxalthough I am not sure that I should talk about the people in it as they do not exist in terms of the House.

Lord Davies of Oldham: My Lords, it might just be possible for once, that the Box has complete confidence in the Minister.

Lord Higgins: My Lords, I do not even have a box. The Minister has been forthcoming all evening. My initial inclination was to press the amendment to a Division, but that would be difficult when there are conflicting views. We need to be clear, with the good will of the Minister, that if, by chance, he turns out to be wrong and I am right, then it is vital that this matter is raised in another place, the situation clearly explained and the matter resolved.

Obviously, we do not wish to have consents given without the legal position being clear with regard to essential navigational safety considerations or the risk of environmental disaster not being fully taken into account. I hope that all future applications are made in the manner that I have advocated, rather than a roundabout route that presents problems. So, relying on the Minister's good faith that this matter will be clarifiedand, no doubt, he will write to us in detailI shall not press the amendment, although I am tempted to do so. I beg leave to withdraw it.

Amendment, by leave, withdrawn.

Clause 95 [Safety zones around renewable energy installations]:

Lord Davies of Oldham moved Amendment No. 14:

Page 73, line 35, leave out "(b)" and insert "a safety zone"

The noble Lord said: My Lords, in moving Amendment No. 14, I shall also speak to Amendment No. 51. They are drafting amendments relating to safety zones. They do not alter the meaning of the provisions but merely serve to make the text clearer. I beg to move.

On Question, amendment agreed to.

Clause 106 [Interpretation of Chapter 1 of Part 3]:

Lord Whitty moved Amendment No. 15:

Page 82, line 26, leave out "a renewable energy" and insert "an"

The noble Lord said: My Lords, this amendment and Amendment No. 16, are technical and set out the definitions of the various clauses. They amend the references to simplify the drafting of the Bill. I beg to move.

Baroness Miller of Hendon: My Lords, I agree that these are simple changes, but can the Minister assure us that an installation will, for the purposes of the Bill,

20 Apr 2004 : Column 249

cover renewable energy installations as well as other energy installations? If he could do so, I would welcome the amendments.

Lord Whitty: My Lords, yes. The references are contained within the provisions, where the terms "construction" and "decommission" are also used. So, it is not necessary to double-up on the definitions.

On Question, amendment agreed to.

Lord Davies of Oldham moved Amendment No. 16:

Page 82, line 35, leave out "a renewable energy" and insert "an"

On Question, amendment agreed to.

Baroness Miller of Hendon moved Amendment No. 17:

After Clause 121, insert the following new clause

"MERGER OF RENEWABLES PAYMENTS FUNDS
In section 32C of the 1989 Act (payment as alternative to complying with order under section 32), after subsection (3) insert
"( ) The system of allocation must pool the sums received in respect of supply in all parts of Great Britain and may not distinguish between evidence presented under section 32(3) (obligation in connection with electricity from renewable sources) in relation to England and Wales and such evidence presented in relation to Scotland.""

The noble Baroness said: My Lords, the amendment is intended to require the Secretary of State to pool the renewables buy-out funds in England and Wales on the one hand, and Scotland on the other. Figures recently published by Ofgem have shown that the current system is open to manipulation through the creation and subsequent gaming of material differences in the value of renewable obligation certificatesor ROCsbetween the different buy-out funds. For example, a supplier with a large market share in Scotland has been able to under-present ROCs in Scotland, thus inflating the value of the remaining ROCs presented there, and then to use the ROCs that he did not present in Scotland to secure extra revenue by presenting them in England and Wales.

Such a practice constitutes an unfair distortion of trade between industry participants. It also creates unnecessary volatility in the ROC market to the detriment of the achievement of the Government's renewable objectives. Merging the funds is clearly the appropriate way to prevent these difficulties. It can be done without any detriment to consumers and would be a demonstration of the Government's commitment to secure the integrity of the renewables market. It is also something which needs to be addressed urgently, as the failure to correct the problem continues to distort the market.

We know that evidence of the manipulation which I mentioned has been given to government officials. They are aware of the problem. It is therefore time for action to deal with a real problem. I beg to move.

20 Apr 2004 : Column 250

9.30 p.m.

Lord Davies of Oldham: My Lords, I appreciate the way in which the noble Baroness moved the amendment and also the concern that lies behind it: the prevention of any possible gaming by a dominant supplier in one market. That would be fulfilling its obligation in one country by using ROCs while meeting the other, in which it commercially dominant, mainly through paying the buy-out. If that were to happen, such a supplier would reduce the amount of buy-out recycled to its competitors in the market where it complied using mainly ROCs while maximising the amount of buy-out fund available for recycling in the other market. It will be recognised that this is a serious matter. I assure the House that we are keeping a close eye on it. Indeed, we recently received a representation on just this point, and we shall be examining the need for action with Ofgem.

I would emphasise that the issue of a pooled buy-out fund for Great Britain is a key one for the forthcoming review of the renewables obligation. But before decisions can be taken, we need to consider the effect on consumers in the constituent parts of Great Britain, how great these effects would be and how to encompass the new renewables obligation planned for Northern Ireland.

In the meantime, it would be premature, to say the least, to move forward with this amendment when we have not yet carried out a detailed analysis of the effect of such a move on consumers. It is very important that we take the time needed to consider its effects in the round, not merely implement the measure with a limited grasp of the full effects.

Should the amendment come into force at the same time as the rest of the Bill, it would affect the obligation period for 200304 for which any payments into the buy-out fund are due on 1 October this year. Suppliers may choose to make their payments before that date. If the amendment were to come into force around late September, that would leave open the distinct possibility of some suppliers deciding to comply early under the existing system and others complying under the new system. To put it at its mildest, that would be a confused and highly undesirable situation.

Furthermore, the amendment would have serious consequences for powers that have previously been executively devolved to Scotland. Fully to achieve the purpose of the amendment of having a single buy-out fund will probably mean the introduction of a single Great Britain-wide obligation, rather than the two obligations we have at present. Taking powers back to Westminster that have already been executively devolved is no light or casual matter.

Therefore, although I feel obliged to resist the amendment, I want to emphasise that we are giving the most careful consideration to this issue in the review of the renewables obligation. It would be possible to take measures that would meet the purpose behind the amendment using secondary legislation and without the need to pull back powers which we have already devolved to Scotland. With a firm undertaking that the issue will be considered fully in the review, and in view of our real awareness of the seriousness of the position,

20 Apr 2004 : Column 251

as the noble Baroness indicated in moving her amendment, I hope that she will feel able to withdraw the amendment.